Question Completion:
Epsilon Co. can produce a unit of product for the following:
Direct material $8
Direct labor 24
Overhead 40
Total costs per unit $72
Answer:
Epsilon Co.
Epsilon should choose to:
Make since the relevant cost to make it is $56.
Explanation:
a) Data and Calculations:
Direct material $8
Direct labor 24
Overhead 40
Total costs per unit $72
Relevant Costs:
Make Buy
Direct material $8
Direct labor 24
Overhead 24
Total costs per unit $56 $60
b) It costs Epsilon less to make the units than to buy from the outside supplier. The relevant cost excludes the 40% of the overhead that will still be incurred by Epsilon if it buys from the supplier. Relevantly, it costs Epsilon $56 per unit to make when compared to the unit cost of $60 to buy. In absolute terms, it will cost Epsilon $76 ($60 + $16) to buy as against $72 to make a unit of the part.
Answer:
True
Explanation:
There are two types of annuity, ordinary annuity and annuity due.
The ordinary annuity is calculated as:
Future Value = 
Whereas Future Value of annuity due is calculated as:
Future Value = (1 + i) 
That is (1+i) Future Value of ordinary annuity.
Therefore, the provided statement is true.
